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Taking the mystery out of probate fees

By  Nerissa Flores, Catholic Register Special
  • October 31, 2018

If people think they will no longer be paying taxes upon death, they are sadly mistaken. As Benjamin Franklin wrote, “in this world nothing can be said to be certain, except death and taxes.” 

In the process of overseeing a person’s estate, the taxman makes his presence known by way of the estate administration tax (EAT),  more commonly known as the probate fee. 

People ponder this with wariness, believing probate fees can eat up a sizeable chunk of an estate. In reality, people make a bigger deal about these fees than necessary. With proper understanding and planning, probate fees are something one can prepare for and minimize to ensure that their loved ones or favourite charities receive most of their hard-earned assets.

What is probate?

Probate is the process of getting a person’s Will legally validated and approved by the courts in the province or territory concerned. During probate the court confirms the appointment of the estate executor named in the Will (called estate trustee in Ontario), thereby giving him/her the responsibility of carrying out the terms of a person’s Will.

To obtain probate, the estate trustee must file certain documents with the court (each province specifies what documentation is required) and pay an estate administration tax or probate fee. The fee is based on the total value of the estate presented for the probate process. Most provinces charge a probate fee which varies depending on the province or territory in which the probate documents were filed (see table).

Is probate necessary?

Depending on the nature of the assets and how the estate was set up, some Wills do not have to go through probate. 

However, most estates go through this process because it may not be possible for the trustee to take over the role of managing or distributing the estate assets until the appointment is granted by the courts. 

Likewise, probate offers an opportunity to settle a Will through a neutral court. 

How can probate fees be minimized?

If one cannot totally avoid probate fees, there are ways to minimize them. However, these should be planned carefully. It may not always make sense to make extra efforts to avoid probate fees. 

There are assets that bypass probate: for example, a registered retirement savings plan (RRSP) and registered retirement income fund (RRIF) can be designated directly to named beneficiaries. 

Another strategy is to have joint ownership of certain assets, with right of survivorship. Those assets will pass the estate and can go directly to the other joint owner(s) at the time of an individual’s death. However, this has to be carefully considered because one must be comfortable with the other person having access and control over these assets. 

Having multiple Wills to divide assets is another way some people minimize probate fees. The validity of multiple Wills, however, have been the subject of a recent ruling of the Ontario Superior Court and while this is being appealed, it is best to consult a lawyer for advice on this matter. 

Others set up trusts so the assets will be dealt with under the terms of the trust rather than form part of the estate. Taking out an insurance policy to cover estate costs is another option. 

There are circumstances where probate might work to one’s advantage and others where it can be avoided or minimized. Professional help is recommended from a financial advisor or lawyer to discuss specific situations.

(Flores is the manager of Planned Giving and Personal Gifts for the Archdiocese of Toronto.)

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